CFC Memorandum 2006-5

February 7, 2006

This CFC Memorandum 2006-5, CFC Accounting Update, replaces CFC Memorandum 2005-14 CFC Accounting Update, which was issued via e-mail to all campaigns on December 7, 2005. Please disregard CFC Memorandum 2005-14. Section E of CFC Memorandum 2005-14, entitled Using PCFO Account For Distributions, has been deleted in this revised Memorandum, because it was determined to be non-compliant with CFC regulation 5 CFR § 950.105(c)(2)(ii). In addition, Section C has been revised to delete the statement that PCFOs should consider applicable State laws on escheatment in attempting to resolve un-cashed checks. It is the position of the Office of CFC Operations (OCFCO) that State escheatment laws are preempted. Finally, the language regarding review of sponsorship agreements in Section B has been clarified.

Based on results of the Agreed-Upon Procedures Reports and Office of Inspector General Audits of CFC Campaigns, we have noted several accounting areas that require guidance. This memo addresses those areas. The procedures outlined in this memo should be implemented during the 2005 campaign.

TRACKING RECEIPTS BY PAYROLL OFFICE – The results from the Agreed-Upon Procedures show that, for the most part, payroll offices are providing the required reports to campaigns. We have met with the one payroll office that was not meeting this requirement and expect the situation to be resolved shortly. The reports from the payroll offices are to be used by campaigns to compare the amounts being received and number of employees with deductions to the campaign’s pledge tracking system. For the 2005 campaign, all campaigns should be tracking receipts by payroll office. Discrepancies should be brought to the attention of the payroll office and/or OCFCO as soon as possible so that resolutions can be made in a timely manner. Procedures for tracking receipts were provided in CFC Memorandum 2003-4 and, in greater detail, at the CFC Workshops in 2004. If your campaign financial staff needs assistance with this process, please contact the OCFCO at (202) 606-2564 or cfc@opm.gov.

ACCOUNTING FOR SPONSORSHIPS – Audits performed by the Office of the Inspector General have noted that funds received from sponsorships within the CFC are not being properly accounted for. To ensure a full accounting of sponsorship funds the following steps should be implemented:

The campaign budget presented to the LFCC must show the full cost of the line items without any adjustments for potential sponsorships.

Sponsorship agreements should be reviewed and approved by the LFCC to ensure that acceptance of such sponsorships is consistent with applicable federal law, including ethical rules governing the conduct of federal employees and rules and guidance issued by the Director of OPM.

The agreement should clearly state the dollar amount the sponsor is providing to the CFC campaign.

While the checks from these sponsors may be deposited directly into the PCFO’s bank account, the actual expense report provided to the LFCC should show the full cost of each line item and detail the reductions from each sponsor for that line item. For example, if one sponsor assisted in covering the cost of the brochure, the brochure line item on the report to the LFCC should show the full cost of the brochure, the amount provided by the sponsor toward that cost, and the resulting net cost to the campaign as shown below.

Each item should be supported by invoices and cancelled checks. If the check from the sponsor covers sponsorship for campaigns in addition to the CFC, the PCFO should request that the sponsor provide a detailed breakdown on the check stub.

The LFCC should be aware of all sponsorships and verify that they have been accounted for prior to approving the final expense reimbursement.

DISPOSITION OF UN-CASHED CHECKS – PCFOs must develop and follow policies and procedures regarding un-cashed checks. We recommend that this policy be documented and implemented after a check has gone un-cashed for six-months. We recommend the procedures include at least three documented follow-up attempts to reach the payee by phone and e-mail. If it is determined that the payee is no longer active, the funds must be distributed among the remaining organizations for that campaign as undesignated funds.

To alleviate problems with un-cashed checks, we encourage campaigns to make their distributions using Electronic Funds Transfers (EFT) whenever possible. When making payments by EFT please identify the campaign in the addendum report (CFC#0000) so the recipient can tell 1) who is sending the funds; and 2) that it came from the CFC and not another campaign administered by the PCFO. In 2006, the OCFCO plans to allow national and international charities to submit their banking information to our office and will provide this banking information to campaigns to assist with this process.

BUDGET/EXPENSES – Proper budgeting is the most important part of planning for the campaign. The budget presented to the LFCC should tie back to the campaign plan, be detailed, and answer the “5 Ws” – who, what, when, where, and why – whenever possible. Allocated expenses, such as indirect salaries and overhead, must be supported by a reasonable allocation methodology. Final expenses charged to the campaign for all categories must equal the actual amount of expenses incurred through direct invoiced costs and the allocated expenses based on actual incurred amounts, not the budgeted expense.

The PCFO and LFCC should review financial reports throughout the campaign. These reports should be in sufficient detail for the LFCC to make informed decisions regarding the campaign. The LFCC may revise the budget throughout the campaign based on unforeseen circumstances. The final reimbursement of expenses must be approved by the LFCC.

If you have any questions on this guidance, please contact the OCFCO at 202-606-2564 or cfc@opm.gov.